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South African platinum strike has cost 30% of annual output: companies

Highlights

The ongoing strike which has idled 60% of South Africa's platinum production will have cost more than 30% of annual output by the end of this week, the strike-hit mining companies said Monday.

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A strike by more than 70,000 workers at South African platinum mines run by Implats, Angloplats and Lonmin is now in its 21st week.

"By the end of the 21st week (on June 13, 2014), the strike will have cost the industry 116 working days (based on an 11-day working fortnight), which is more than 30% of annual production," the miners said in a fact sheet.

In 2013, South Africa's mines provided just over half of the world's total platinum supply.


To date employers have forfeited some Rand 22 billion ($2.1 billion) in revenue and employees have forfeited around Rand 10 billion in wages and benefits, the companies added.

Workers downed tools on January 23 demanding an immediate doubling of entry-level pay to around $1,170 a month. Employers are offering increases of between 7% and 9% over the next three years.

According to the fact sheet, as of January AMCU accounted for 82% of the unionized workforce at Lonmin, 62% at Amplats and 61% at Implats.

In the fact sheet, the miners reiterated their view that AMCU's wage demands are unsustainable.

"For platinum mining companies, wages amount to between 55% and 60% of costs," the miners said, adding that wages have, over the past decade, increased by levels well in excess of the consumer price index.

"In 2012, the average basic mining wage of Rand 6,000 per month was almost double the average entry-level wage payable in South Africa," the fact sheet noted.

"Wage increases on the scale that AMCU is demanding is not sustainable," the miners said.

South Africa's new mines minister, Ngoako Ramathlodi, held talks with both sides last week in a bid to broker a solution to the strike.

"I met with each of the parties individually, and then subsequently agreed to establish a technical team to assist in the matter," the minister said in a statement on Saturday. "The technical team presented a proposal, which both parties agreed to take back to their respective constituencies. Meetings have been continuing on a daily basis until yesterday [June 6]."

A further meeting is scheduled for Monday.

"Monday June 9 will be our last meeting with all parties. I am making a humble appeal to all the parties involved to assist us to move this process forward," Ramathlodi said. "We cannot continue to meet indefinitely. At some point, we must find an implementable solution."

Workers have gone around five months without pay and "have in effect been reduced to beggars," the minister said, adding: "The situation is untenable. The companies are also under pressure. The economy is suffering -- the latest GDP figures attest to that. We therefore have no option but to find a sustainable solution."

According to Statistics South Africa, the country's seasonally adjusted real GDP for the first quarter of 2014 decreased by an annualized rate of 0.6%, with the main contributors to the drop in economic activity the mining and quarrying industry (-1.3 percentage points) and the manufacturing industry (-0.7 of a percentage point).

--Andy Blamey, andy.blamey@platts.com
--Edited by Alisdair Bowles, alisdair.bowles@platts.com